Behavioral, Blog, Microeconomics

BLOG: The Decoy Effect and Risk Aversion

By Ryan Pak, New York University Stern School of Business -- The decoy effect arises when a firm offers a product that is clearly inferior to another product in order to drive sales of the latter. This phenomenon has been displayed experimentally in many different situations, but remains understudied theoretically. We develop a model of almost rational consumer choice, with a single behavioral tendency — regret aversion.

Behavioral, Blog

BLOG: Expert Opinion and Restaurant Pricing: Quantifying the Value of a Michelin Star

By Carly Shin, The George Washington University.
This paper investigates the relationship between expert ratings and the restaurant market. Specifically, this paper aims to broaden our understanding of the experience goods markets by looking at the effects of both having an expert-awarded Michelin star and earning or losing a Michelin star on New York City restaurant prices.